Download Ref No: NSE/INSP/41498 Date : July 03, 2019

Circular Ref. No: 20/2019

To All Members,

Sub: Clarification on Interoperability among Clearing Corporations

This is further to the Exchange circular NSE/INSP/41017 dated May 16, 2019 on
clarification on interoperability. Based on representations received from Members, an
updated frequently asked questions (FAQs) is being issued on the same. The revised FAQs
are enclosed as Annexure-A for your reference.

The FAQs are prepared with a view to guide Members on the compliance issues arising
out of Interoperability and the same may be updated from time to time.
All members are advised to take note of the same.

For and on behalf of

National Stock Exchange of India Limited

Srijith Menon
Chief Manager-Inspection
Enclosed: Annexure A

In case of any clarifications, Members may contact our below offices:

Regional Office CONTACT NO. E MAIL ID
Ahmedabad (ARO) 079-49008632 inspectionahm@nse.co.in
Chennai (CRO) 044- 66309915/17 inspection_cro@nse.co.in
Delhi (DRO) 011-23459127 / 38 / 46 delhi_inspection@nse.co.in
Kolkata (KRO) 033-40400411 / 06 inspection_kolkata@nse.co.in
Mumbai(WRO) 022-25045264/259/224 compliance_wro@nse.co.in
Central Help Desk compliance_assistance@nse.co.in
 Annexure-A

FAQ on Interoperability among Clearing Corporations

1. How will Client financial ledgers be maintained in view of the inter-

operability?

The standardised format of client financial ledger has been specified vide Exchange
circulars NSE/INSP/38743 dated August 30, 2018 & NSE/INSP/39393 dated
November 13, 2018.

With respect to Segments forming part of interoperability, Client financial ledgers

can be prepared Segment wise and consolidated across Exchanges. (For instance,
in case of CM, FO & CD Segment, Member shall maintain separate ledger for CM
Segment across all Exchanges & separate ledger for FO segment across all
Exchanges & separate ledger for CD segment across all Exchanges). The bills
posted shall mention the relevant Clearing Corporation’s (CC) settlement number,
as available. However, during inspections, Members should be able to demonstrate
the break-up of trades (Segment-wise & Exchange-wise) for the bills so posted.

Further, the “Exchange” column (column no. 7 of client ledger format) shall be
replaced with “Clearing Corporation (CC)” and the name of the Designated
Clearing corporation which is clearing the trades shall be mentioned.

With respect to other Segments/products which are not part of interoperability of

CCs, Members shall continue to follow the existing practice.

2. Will the format of Common contract note change?

Exchange circular NSE/INSP/39158 dated October 15, 2018, prescribes the format
of the Common contract note. In view of introduction of interoperability, Members
may give trade information in the contract note, Exchange wise or Segment wise.
 Member may also give additional details in the contract notes or make necessary
changes without compromising with the minimum details prescribed in the existing
format.
The contract note shall bear the respective settlement numbers at the appropriate
place provided and the “Name of Exchange & Segment” shall be replaced with
“Name of Clearing Corporation & Segment”.

3. How will the serial number be mentioned on the contract note if the same is
issued Segment-wise?
The serial number on the contract notes shall commence from April 01 of the
respective financial year. Members, based on their internal policy, may opt to issue
a single consolidated contract note or issue separate contract notes for different
segments as the case may be. Such internal policy shall also lay down guidelines on
the serial number and shall be followed consistently.
However, as a one-time exercise, Members shall be provided an option to reset the
serial number w.e.f. June 03, 2019 in view of the inter-operability.

4. Will the reporting under Margin Trading (MTF) change due to

interoperability?

Reporting shall be done on the Exchange on which the exposure was taken (i.e.
scrip was bought). However, in case of liquidation, the reporting shall be done on
the Exchange in which the scrip was bought, under the column provided for
liquidation, even if it was liquidated on another Exchange.

5. How will Register of securities (ROS) be maintained in view of the inter-

operability?

The standardised format of ROS has been specified vide Exchange circular
NSE/INSP/38743 dated August 30, 2018 & NSE/INSP/39393 dated November 13,
2018. In view of Inter-operability, “Exchange” column (column no. 3 of ROS
 format) shall be replaced with “Clearing Corporation (CC)” or “Clearing Member”
as the case may be. Accordingly, member shall mention the relevant CC/CM name,
in the said column.
Further, the “Settlement No.” column (Column 11 of the ROS format) shall bear
the settlement number of the relevant CC through which trades are cleared.
However, during inspections, Members should be able to demonstrate the breakup
of trades (Segment-wise & Exchange-wise).

There will be no change in the format of holding statement.

6. Whether, after interoperability, NRIs can buy/sell on one Exchange and

square up on other Exchange(s) on the same trading day?

No, NRIs cannot undertake intra-day transactions in cash segment. In case a scrip
is bought/sold on one Exchange, Members will have to ensure that the same scrip
is not squared up on same or other Exchange(s) on the same trading day and ensure
that such NRI Investor takes delivery of shares purchased and give delivery of
shares sold.

7. For the purpose of collection and reporting Margin/MTM losses, financial

balances of which segment should be used?

Members shall consider the free & unencumbered consolidated balance across all
segments and Exchanges (including Commodities but excluding balances in the
client’s Margin Trading (MTF) account) for the purpose of collection & reporting
Margin/MTM losses of the client. This shall be in supersession to point no. 5 of
Annexure-A of NSE circular NSE/INSP/38154 dated June 27, 2018.

8. What will be the implication on trading for a client if such client is registered
only one Exchange?

For the purpose of trading, the investor should be registered as client with the
Exchange. A client registered with one exchange will be allowed to trade only in
 that exchange but can settle through any designated CC. However, such client,
cannot trade on any other exchange unless registered to trade on that exchange.

9. Will there be any change in the weekly reporting of securities holding details
in view of the Inter-operability?

There will be no change in the weekly reporting of securities holding details. The
holding statement is required to be prepared on a consolidated basis across all
Exchange. In view of the same Members shall continue to upload the date-wise, DP
account wise, client-wise and ISIN wise securities holding balances to all the
Exchanges irrespective of the Designated Clearing Corporation selected.

10. Will there be any change in the weekly submission of data towards monitoring
of client funds (Enhanced Supervision) in view of the Inter-operability?

The various data required to be submitted towards weekly monitoring of client

funds as stipulated by the provisions of Enhanced Supervision is a consolidated data
across all Exchanges. Hence, there will be no change in the submission of the same
and will continue to be reported on all the Exchanges wherever the Member is
registered.

11. In view of the inter-operability, will there be any change in the Monthly
reporting of Clients funds and securities balances as stipulated by the
provisions of Enhanced Supervision?
As per SEBI circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September
26, 2016, Members, among other informations, is required to provide data relating
to Exchange-wise end of day fund balance as per the client ledger, consolidated
across all segments and the net funds payable or receivable by the broker to/from
the client across all Exchanges.

In view of the interoperability, the following changes shall be noted:-

a) In case of Members holding membership in Exchange/s excluding Commodity
Exchanges, the data relating to “Exchange-wise end of day fund balance as per the
client ledger” shall not be submitted. Only the “net funds payable or receivable by
the broker to/from the client across all Exchanges” shall be reported. Such Net funds
shall also include balances in the commodity segment of the Stock Exchanges
Members shall enter “NA” or “0” in the field provided for “Exchange-wise end of
day fund balance.

b) There will be no change in reporting mechanism to Commodity Exchanges and it

will continue as it is.

c) In case of Members holding multiple membership in Exchanges including

Commodity Exchanges, such Member shall :
 Provide data relating to “Exchange-wise end of day fund balance” as well as “net
funds payable or receivable by the broker to/from the client across all
Exchanges” while reporting to Commodity Exchanges.
 Exclude data relating to “Exchange-wise end of day fund balance” and input
only the “net funds payable or receivable by the broker to/from the client across
all Exchanges” while reporting to Stock Exchanges. Members shall enter “NA”
or “0” in the field provided for “Exchange-wise end of day fund balance.

There are no changes in the other information submitted viz. total number of ISINs
and number of securities across all ISINs, details of Securities pledged, End of the
day Commodities balance, details of pledge and settlement date. Members shall
continue to submit the details as per the existing guidelines.

Illustration-1: Member having multiple Membership in all Exchanges

including Commodities Exchanges

Exchange Balances ( Rs.)

Stock Exchange-1 & 2 50,000 (Cr.)
Commodity Exchange 20,000 (Cr.)
 Reporting at Stock Exchanges

End of day Fund End of day securities Details of Securities

Balances balance pledged

Exchange Last balance

Client
wise Net across Total Quantity of settlement
Name Total quantity Funds
Fund Exchanges number of securities date
of securities raised (Rs.)
balance (Rs.) ISINs pledged
(Rs.)

ABC NA 70,000 5 1000 0 0 dd-mmm-yyyy

Reporting at Commodity Exchanges

End of day Fund End of day securities Details of Securities

Balances balance pledged

Exchange Last balance

Client
wise Net across Total Total Quantity of settlement
Name Funds
Fund Exchanges number of quantity of securities date
raised (Rs.)
balance (Rs.) ISINs securities pledged
(Rs.)

ABC 20,000 70,000 5 1000 0 0 dd-mmm-yyyy

12. How will the reporting of client funding be undertaken?

There is no change in the Client Funding Report and will continue to be reported at
the traded Exchange (i.e. where shares have been bought). In case you have bought
on one Exchange and sold on another Exchange, the reporting will be done on the
Exchange where there is an o/s bought position. For Illustration:

Exchange Bought Sold

Exchange-1 1000 qty
Exchange-2 500 qty
O/s Position 500 qty

In the above illustration, the reporting will be done in Exchange -1.

13. Will exposure be granted on the deposits placed with the Exchanges?

The designated Clearing Corporation shall grant exposure on the free & un-
encumbered deposits (excluding the minimum deposits prescribed by SEBI i.e.
Base Minimum Capital) placed by Trading Members at each segment level with all
the concerned Exchanges.

14. How will the reporting of Risk Based Supervision data be done?

In view of interoperability the following data which is currently submitted exchange

wise in the RBS shall, henceforth, be submitted across all Exchanges:
 Brokerage income
 Total debit balance of all clients
 Total available collaterals from all debit balance clients
 Total amount of delayed payment charges collected from the clients